BSB Group Partner Andrew Bereza considers what the year ahead may hold for construction in the GCC, and for global business in general, as a divided political landscape combines with an ever-increasing demand for better and faster solutions and services by customers, and a more engaging and productive working environment for employees. Businesses are facing up to new challenges in 2018.
It is essential for businesses to retain focus on what they really excel at in 2018. We see with the collapse of Carillion, a top British contractor, just how precarious the situation can be for even the biggest industry leaders. Carillion’s ill-fated year has been attributed to delayed payments for completed projects overseas, along with placing too many resources into projects that would ultimately prove unprofitable.With increasing debts ($1.2 billion and rising), and a pension deficit that exceeds $800 million, the liquidation of the company became inevitable. Partners on existing projects are now facing the prospect of huge, costly delays, and more than 80,000 people across the world have lost their jobs. It can certainly become a volatile business environment if poor decisions are made in terms of company direction. We often now see the dilution of services offered by specialist companies as they attempt to branch out into sectors for which they may not have the necessary expertise or reputation.
In a recent survey a number of top global business leaders reinforced the point that focus and keeping things simple will ultimately lead to success in 2018. Focusing on the solutions you provide, the talent you employ and the way in which you utilise technological advancements could ultimately dictate the level of success you achieve in 2018.
At BSB Group, we continue to focus on attracting and retaining talent – something that has been a constant in our business model since we were established. We do this through encouraging leadership at every level of the business, developing skills, rewarding those that show initiative and a continued commitment to the company mission and vision, promoting from within and of course embarking upon new projects that challenge and excite our people.
Finally, we have not tried to diversify away from or dilute our core service offering. We recognise we enjoy a great reputation for the delivery of high quality fast track projects, and given this we are always looking at people who can help, tools that can be employed or complementary services that can be added to improve the existing product we offer to our clients.
New innovations, software and hardware continue to be introduced to our sector with the potential to transform and improve key areas. In the future we are likely to see blockchain playing a role in construction, for instance through the administration of smart contracts. The introduction of smart contracts can only help the industry, largely removing the administrative burden associated with the process of moving from completed work to payment.AI and VR will become accepted by more key players in construction during the course of 2018, as many top firms used 2017 to trial and consider the application of these technologies.
Often architects and developers will rest on the side of caution when it comes to transformative technology introduction, and BIM is a great example of this. Revit was released in 2002, whilst BSBG Group was an early adopter and all our projects now reside in this platform, an estimated 54% (according to the National BIM Report) of architects worldwide are still yet to embrace the obvious benefits of this technology.
The impact of BIM opened up many architects to the need for embracing new technology as a means to further streamline working practices, improve efficiency and cut costs. VR and AI, while not having quite the impact of BIM, certainly complement it in many ways, and so I expect that this technology will be incorporated for some during 2018, with others to follow in the run up to 2020.
This time last year there was great uncertainty on the political front, but despite relatively conservative global economic forecasts, 2017 saw global growth exceed expectations. And while we remain shrouded by precarious political and social landscapes, we are also in a period of coordinated global growth between Asia, America and Europe for the first time in a many years. How long this will last remains to be seen, as most Central Banks are threatening to increase rates at a faster pace in 2018 and unwind years of stimulus.
Consumer, supplier – and for us, developer – confidence is hugely influenced by political and investment stability, as well as a united society. I hope that the appetite for change in many key areas can have a positive impact on business for everyone this year, especially in our region, the Middle East – where confidence and stability have been in short supply in recent years.
This leads us into Construction in the GCC. The UAE (Dubai predominantly) was number one in the region for contracts awarded in 2017*. The outlook for 2018 suggests that this will continue, as the Dubai government prepares to spend AED 5 billion ($1.36 billion) this year on Expo-related projects alone. There is also the Metro extension to the Expo site, with contracts expected to exceed AED 10.5 billion ($2.85 billion). We then have the extended areas around Dubai South, the continued plans for Dubai Creek Harbour, and other big infrastructure projects in the pipeline across the whole of the UAE. But despite these high profile projects, the UAE/Dubai is actually forecasted to have a slower 2018 than 2017, a year in which many in the industry here struggled.
Saudi Arabia also didn’t reach the expectations predicted last year for construction projects, but as the recent political upheaval settles down, we could see the current Crown Prince, Sheikh Mohammed bin Salman, turn his attention to infrastructure and the need for large scale construction to re-position the Kingdom as it faces up to the post-oil economy and urgent need for diversification.
In terms of BSB Group’s project portfolio, 2018 will be the year we deliver a number of the most high profile projects since our establishment. The Opus, Bluewaters Island Residential and BLVD Crescent are all scheduled for handover during 2018, marking this year as one of the most important in our history.In addition, we are close to moving through significant milestones on other key projects, some of which remain confidential – for now.
Given all of the above we expect 2018 to be solid for BSB Group as we retain focus on providing market leading core services, despite the challenges we face in our region and industry. We will, however, look to move into new territories to provide new work, should – as is forecasted – the UAE market continue to slow in the approach to Expo 2020.
*Source: MEED Projects